Texas Rangers Bankruptcy

Texas Rangers Bankruptcy

 

Several years ago, the Texas Rangers (baseball team) went bankrupt. There were several competitive and contentious bids. One group won out. Imagine that you are an investor. You are going to write a letter to the Chairman of the corporation. Of course, your letter has to indicate that you are either happy or unhappy with the way things are.

 

Do some research on how the new Texas Rangers (following bankruptcy) are doing. The paper is not about how many games they win but about their financial situation. Here are a few considerations:

 

l  Are they operating in the red or the black?

l  Are the stockholders happy?

l  What are they doing wrong?

 

A few additional considerations

 

l  This is not about sports or marketing; it is about finance.

l  You are either happy or unhappy, not both at the same time.

After reviewing your draft and making necessary changes, upload it as a Word document (doc not docx) to the drop box.

 

Tom Hicks who used to operate his private equity sold Texas Rangers’ stock to Nolan Ryan who is team president. When Hicks bought the team in 1988 from a group that included former president George Bush, the market cap is $250. The market capitalization was constantly growing up. However, this year’s market cap failed from $412 in last year to $405 and then, Hick determined to sell the stock to investors due to the fact there were so many claims which suffered their management. In my opinion, investors benefit is large because the sold price is $575. However, the good price is including all debt which Rangers used to incur. The new owners of Rangers need to hedge these risk and required to know how to optimize their profit in this condition.

To keep player’s motivation is one of big issues. Alex Rodrigues is 25 million dollar creditor. Game has to be fair. Baseball shouldn’t give them other consideration such as money. This kind of bankruptcy would affect disorder of national sports world.

There were several reasons which brought about this bankruptcy. First is their mismanagement. It is that Rangers usually ignored creditor’s vote in spite of their right to join management. Second is their mismanagement of franchising. They were required to improve their past franchising process and made prepackage plan due to the fact they actually could expect their franchising failing.